BOJ Bazooka to Boost a Corner of Bond Market: Pro

The U.S. mortgage backed securities (MBS) market,specifically Ginnie Mae bonds, could be one of the key beneficiaries of the surprise move by the Bank of Japan (BOJ) last week to embark on an aggressive monetary policy program, according to analysts at Deutsche Bank.

The bank said institutional investors seeking alternatives would move away from Japanese government bonds (JGB) into equities, cash, U.S. Treasurys and other higher-yielding bonds.

The bank said Ginnie Mae bonds "should see the most flow"because they are backed by the full faith and credit of the U.S.

The Deutsche Bank team led by David Folkerts-Landau, global head of research, said Japanese investors would favor Ginnie Mae bonds over those of mortgage finance agencies Fannie Mae and Freddie Mac because investors had lost confidence in them after those companies went into conservatorship in 2008.